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Snubbed by Samsung over Exynos, Lenovo wants to design its own chips

Lenovo is reportedly creating its own chip design division, that will focus on creating systems on a chip for mobile devices. One on of the reasons behind the move is the strained relationship with Samsung.

The mobile components business is in a peculiar state, because many competitors are partners at the same time. The ambiguous relationship between Samsung and Apple is the best known, but there are many other instances of companies collaborating in one area, while competing fiercely in others.

The system-on-a-chip (application processor) industry is about to get even more complicated, if a report from EETimes is accurate. The Chinese technology giant Lenovo is said to be establishing its own SoC design division, in order to better compete in the mobile market. The move from Lenovo, a top PC maker and China’s second largest phone manufacturer, could send ripples across the industry.

Lenovo will beef up its processor design team to 100 engineers by the middle of the year. The Chinese company is hiring technical personnel in Beijing and Shenzhen, said an industry source with knowledge of the hiring process.

This initiative appears to be driven by the company’s desire to control its own destiny in smartphones and tablets–a la HiSilicon at Huawei.

You may know that Huawei, another Chinese technology giant, is designing its own processors, such as the quad-core 1.5GHz K3V2 SoC that powers the 6.3-inch Ascend Mate. Lenovo is apparently aiming to emulate Huawei’s approach, and thus limit its dependency on chip providers such as Samsung or Intel.

Why is Lenovo interested in chip design?

Of course, 100 engineers don’t make a chip division, and even if Lenovo will expand the design team, it could take many months until the first commercial products hit the market. However, as EETimes notes, Lenovo could simply be trying to get more leverage in its negotiations with suppliers, and Samsung in particular.

Samsung is making the successful Exynos line of systems on a chip, which power many of its devices, such as the Galaxy Note 2 or versions of the Galaxy S4. But the Korean company is also selling Exynos processors to other phone makers, including Lenovo (the first company outside Samsung to use an Exynos chip) and Meizu.

Apparently, the relationship between Samsung and Lenovo is tense, and the reason is the shrinking difference in the market share of the two companies in China. The huge market is currently lead by Samsung with close to 18 percent market share, but Lenovo is not far behind with 13 percent.

Samsung reportedly denied Lenovo access to its latest Exynos processors. If Samsung is able to deliver the Exynos chips but deliberately chose to refuse its competitor, it would be a major hostile gesture. However, given the limited availability of the Exynos 5 Octa version of the Galaxy S4, the refusal could be caused by Samsung’s inability to make enough chips.

The SoC landscape is already crowded, but if anyone can make a new entry it’s Lenovo. We’ll see more over the next year.